Why I love Tax Deeds

If you have spent any amount of time reading my blog posts here or over at www.facebook.com/Forevercashlife, then you know that I love to find new investment methods that other people have passed over. I like to find the deals that most other folks miss and share them with you.

So in that vein, I wanted to tax about tax delinquent properties. This blog post will be about tax deeds, and the next one will be about tax liens.

First a little background information.

In the United States, all property owners are required to pay property taxes. These taxes are used to pay for services that benefit the whole community, usually including public education and firefighters. As long as all property owners pay their taxes, they won’t have any problems. But if they become delinquent on their taxes, then counties have been authorized by their corresponding state constitutions to do something about it – they can confiscate the property.

This process can often take several years, but the end result (in about half of the counties across the country) – is the same. The county forecloses on the property for nonpayment of taxes and then offers the deed to the property to the public at either an auction or a private sale. The county benefits from this arrangement because they get the money they need to keep civilization running. Investors benefit because they can buy parcels of land (sometimes with structures) for a fraction of their value.

What are some of the advantages of purchasing tax deeds as an investment? Well, depending on the county that you are investing in, you can expect to receive a clean title to the land and in most cases you can take possession of and improve the land right away. Or, you can flip it to a third party.

Some people think that tax deeds aren’t worth their while because some of the properties have obviously been neglected or because others are vacant land. But that’s where what I mentioned earlier – finding the deals that most other folks miss – comes into play. I have learned to recognize the inherent value in vacant land and neglected houses.

You see, something I always remind my students is that “they are not the market”. So don’t let your standards influence the investments you make. Someone will most likely be thrilled with that deed to a parcel of desert land. Or a rehabber would be thrilled to get e rundown house that he can fix and flip.

By going to the county to purchase tax deeds, you become a land and house wholesaler to others, and you perform a valuable service to the community – giving them the funds they need to operate (most counties LOVE real estate investors for that very reason).